As per the report of Micro Small and Medium Enterprises (MSME) lender SIDBI (Small Industries Development Bank of India) and Transunion-Cibil, MSME Pulse – Edition XII, the value of new loans disbursed to the MSME sector in FY21 (COVID-19 period) was Rs.9.5 lakh crore, 40% higher than Rs.6.8 lakh crore in FY20 (pre-COVID-19 period).
- It was mainly supported by the Emergency Credit Line Guarantee Scheme (ECLGS), the government’s initiative under the AtmaNirbhar Bharat programme.
Highlights of the Report:
i.Credit Demand: The credit demand (measured as credit enquiries) was dropped by 76 percent (due to the 1st wave of COVID-19) and later recovered by ECLGS to 32 percent over pre-COVID-19 levels in March 2021. Now, the credit demand recovered back in June 2021 (after the unlocks).
ii.Credit Growth: India’s total on-balance sheet commercial lending exposure in March 2021 stood at Rs 74.36 lakh crores with a YOY (Year-on-Year) growth rate of 0.6 percent in which, the MSME sector’s credit exposure was about Rs 20.21 lakh crores with 6.6 percent YOY growth rate.
- The credit disbursal to New-to-Bank (NTB) MSMEs was reduced by 90 percent in April 2020 (compared to pre-COVID levels) and recovered back to 5 percent higher than pre-COVID levels in March 2021.
- The lending to Existing-to-Bank (ETB) MSMEs increased to 75 percent over pre-COVID levels in June 2020 due to ECLGS.
Note – Borrowers who had an existing commercial credit relationship with the lender are defined as ETB, and those with no commercial credit relationship are classified as NTB.
iv.NPA Rate: Due to the strong credit inflow, the NPA (Non-Performing Assets) rates of MSMEs in March 2021 was controlled at 12.5 percent compared with 12.6 percent in March 2020.
Recent Related News:
On World Micro, Small and Medium Enterprises (MSME) Day (June 27, 2021), the Small Industries Development Bank of India (SIDBI), has rolled out multiple measures to support COVID-19 hit MSMEs.
About Emergency Credit Line Guarantee Scheme (ECLGS):
i.It was launched by the Finance Ministry in May 2020 as a part of the Government’s ‘Atma Nirbhar’ to provide credit Rs 3 lakh crore unsecured loans to COVID-19 hit MSMEs.
ii.Under ECLGS 3.0, the scope of ECLGS was extended to new sectors, such as hospitality, travel and tourism, and the lending under it was extended till September 30, 2021.
iii.Under ECLGS, 100 percent guarantee coverage was provided by NCGTC (National Credit Guarantee Trustee Company) to public and private banks and NBFCs (Non-banking Finance Companies).